A rising tide in luxe home sales

The historic Villa Rockledge, a sprawling, oceanfront, Mediterranean Revival compound in Laguna Beach, went on and off the market for years before being scheduled for an online and on-site auction in December. The home sold for $14 million -- a few days ahead of the auction date. FILE PHOTO

A recent buyer looking to snag a Newport Coast estate home had a vision: She wanted to install an elevator in an already spacious walk-in closet. While weighing an offer, she decided her wardrobe would span two separate floors.

"She just wants this massive closet,'' said Realtor Lance Fogel of Keller Williams Realty in Newport Beach. "The closet would be 1,700 square feet. That's bigger than most homes.''

Luring buyers with fancy ideas and big bank accounts is no problem, Fogel says. The real challenge these days is finding enough luxury homes to put them in.

High-end home sales have spiked. DataQuick projects a 48 percent year-over-year increase in 2012 for Orange County residences selling for $2 million and up. Luxe sales through November already have surpassed every year since 2007.

In November, 64 homes sold in Orange County for more than $2 million, compared with 29 homes in November 2011, said Mark Boud, owner of Real Estate Economics, a consulting firm based in Irvine.

"The whole market has picked up in terms of sales volume,'' Boud said, "but the sales volume increase has been especially high for luxury housing sales.''

Nationwide, sales of homes $1 million or more jumped 51 percent in November compared with a year earlier, the National Association of Realtors reports.

Several factors are fueling the high-end trend:

•The rush to avoid the increase in the capital gains tax. It goes up this year from 15 percent to 20 percent for individuals earning over $400,000 and couples making more than $450,000. Luxury home sales shot up at the end of 2012 as affluent buyers tried to take advantage of lower tax rates. The luxe homes inventory has since been dropping drastically, Philip White, Sotheby's chief executive officer, told CNN last week.

•The shortage of houses. The lack of inventory plaguing the $700,000-and-under market in Orange County also turns out to be an up-market phenomenon. The inventory of homes for sale at $1 million and up fell about 40 percent in November 2012 compared with November 2011, Boud said. "There is nothing for people to buy,'' says Fogel, who specializes in homes selling for $4 million and up. "I have two dozen buyers right now. I just do not have (houses) for them.''

He and other Realtors say bidding wars are breaking out on multimillion-dollar properties.

•The influx of foreign buyers. "We're getting a lot more international demand, from the Middle East, from China, from other Asian countries. That's a big reason for the increase,'' Boud said. "The U.S. dollar is so low, it's almost like a fire sale.''

Fogel put it this way: "The international buyers are finally pulling the trigger. The last few years, they were window shopping.''

•The attention-getting auctions. In Laguna Beach, for example, the historic Villa Rockledge, a sprawling, oceanfront, Mediterranean Revival compound, went on and off the market for years. The property, stretching across a 30,000-square-foot oceanfront bluff with a main home and seven adjacent guest villas, once was listed as high as $34.5 million. An on-site and online auction was set for December. The goal: connect with both a local and global marketplace. The auction's marketing campaign led about 250 real estate agents and more than 450 qualified buyers to tour the property, said Todd Wohl, vice president of Premiere Estates, the auction company. Several buyers submitted pre-auction offers, and Villa Rockledge sold at $14 million – a few days in advance of the scheduled auction date.

•The surge in "jumbo jumbo" loans. Lenders distributed $148 billion of private jumbos – which exceed amounts that banks loan to borrowers and then sell to government agencies – over the first nine months of 2012. That's up more than 23 percent from the same period a year ago, according to Inside Mortgage Finance, a trade publication.

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